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Google Falls, Yahoo Sails in Customer Satisfaction

In an ACSI survey, Yahoo surpassed Google in customer satisfaction. Is Google headed for rough times?

Customer satisfaction and financial results may not always be in step.

One sign: Yahoo placed ahead of Google in the American Customer Satisfaction Index (ACSI), which measures customers opinions about products and services in the United States.

The report comes as search engine portals Google and Yahoo, along with Microsoft and to a lesser degree AOL, continue to duke it out in the red-hot market for online advertising revenue.

The survey, taken by researchers at the University of Michigans National Quality Research Center and sponsored by ForeSee Results, found that Yahoos score on the index rose 4 percent to 79, usurping the lead from Google for portals and search engines by one point on ASCIs scale of 100. Google dropped 3.7 percent to 78.

Further reading

The ASCI report attributed Yahoos one-point victory over Google to the search engine portals new design changes and enhancements, which increased customer satisfaction, according to ForeSee Results President and CEO Larry Freed.

Read more here about CEO Jerry Yangs vision for Yahoo.

It is all good news for Yahoo, which has struggled in the face of flagging financials, disagreements about how to run the business and high-level executive turnover.

However, ASCI still rated Google, which has been acquiring at a rapid rate and enjoying strong financial success and a market capitalization of more than $160 billion, "the most popular search engine."

ForeSees Freed said that while Google has no immediate cause for concern, lower customer satisfaction scores have foreshadowed lower financials. Just ask Yahoo.

"In 2006, Yahoo scored a 76 and Google scored an 81, which told us that Google is going to perform well financially and Yahoo is going to struggle and thats what happened," Freed said.

"Google dropped 3 points, which is definitely significant and now theyre neck and neck so to speak, so I wouldnt say that sky is falling on Google, but this could be an issue," Freed added.

What, then, is Googles problem all of a sudden? Freed said despite Googles ongoing innovation in search and its complementary collaboration products, the average consumer doesnt know about it or doesnt see it.

"I think from the consumers perspective, they look at Google and say Boy, its the same as it was three years ago. You add a little bit of the occasional bad press about privacy issues and it starts to make people a little less satisfied," Freed said.

Ultimately, Freed said he expects Yahoos financials to improve in the second half of 2007, buoyed by the positive changes, which, in addition to resdesigns and new features, includes new CEO and company co-founder Jerry Yang.

Yahoo and Google aside, it was Ask.com that improved the most, thanks to a snazzy redesign.

Ask.coms rating rose 6 percent to 75. Meanwhile, AOL suffered the largest plunge in customer satisfaction this quarter, down 10 percent to a score of 67.

ASCI covers other high-tech businesses, too. In the PC business, ASCI found that customer satisfaction fell 3 percent to a score of 75, with Apple and Dell each dropping 5 percent. However, Apple still leads in customer satisfaction, with a score of 79.

Overall, ASCI showed that customer satisfaction remains lukewarm, edging up 0.1 percent and up only 1 percent since the second quarter of 2006.

Claes Fornell, head of the ACSI at the University of Michigan, said in a statement that the slumping housing market and increased debt may be the factors that are weakening spending growth.